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Who can give an example of the “code” for raising venture capital here in Silicon Valley? 1. Never cold call. Get a referral… 2. VCs rarely say no. 3. Entrepreneurs should not tell VCs what the valuation is for their company. VC’s offer and set the price.

Those who blame others Or fail twice are blacklisted

Silicon Valley 2010- Changes in the Circles of Influence from Prof Tom Kosnik

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Silicon Valley 2000-2010: Changes in the Circles of Influence Prepared Tom Kosnik and Lena Ramfelt, Coauthors of Circles of Influence (in revision) Presented at NUS on March 25, 2010 If you circulate any part of this presentation please give credit to the authors.

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Agenda <ul><li>What is Silicon Valley? </li></ul><ul><li>Stanford and NUS are at Ground Zero </li></ul><ul><li>Circles of Influence: Players, Stakes and Code </li></ul><ul><li>The Players in 2000… and 2010 </li></ul><ul><li>Web 2.0 & Mobile Milestones in the Valley </li></ul><ul><li>Clean Tech Categories on the Rise in the Valley </li></ul><ul><li>Venture Capital Trends in the Valley </li></ul><ul><li>Reasons for the Venture Capital Crunch </li></ul><ul><li>The Rise of Incubators and Accelerators </li></ul><ul><li>How Entrepreneurs are Coping with Changes </li></ul><ul><li>Examples of Trustworthy “Young Guns” in VC </li></ul>

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To get players to bet their stakes on your venture - you’ve got to know the code… <ul><li>What is the code? </li></ul><ul><li>“ Local” rules of the game </li></ul><ul><li>Usually implicit </li></ul><ul><li>Communicated in private </li></ul><ul><li>Rooted in local entrepreneurial cultures </li></ul><ul><li>Changing across industries in the same location. </li></ul>Knowing the code accelerates your ability to build trust.

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Venture Capital Investment Trends in Silicon Valley The bottom line: There is Scarcity in the Land of Plenty! Source: https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical

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Reasons for The Venture Capital Crunch Shrinking Value of other investments reduces the amount LPs are allowed for VC funds Poor performance of most VC funds in last 10 years makes VC less attractive Disruption of investment banks make fewer trusted players to help with IPOs and M&A Public distrust requires VCs to hold startups longer to reach profitability before exit Venture Capital Funds

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How Entrepreneurs are Coping with the Changes in Silicon Valley <ul><li>“ Getting outside the building” to develop paying customers while developing products!!! </li></ul><ul><li>Relying on parents to bootstrap their ventures </li></ul><ul><li>Sharing info on VCs on TheFunded.com </li></ul><ul><li>Avoiding “old school VCs” – working with “young guns” </li></ul><ul><li>Joining Incubators and/or Accelerators </li></ul><ul><li>Entering multiple business plan competitions </li></ul><ul><li>Offshoring development from the outset. </li></ul>Some of these are opportunities for NUS Enterprise & NOC Alumni!

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Appendix Myths and Paradoxes in Silicon Valley Not for presentation. Possible use in Q and A

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Venture Capital Investment Trends in the U.S. Source: https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical

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The 7 Paradoxes of Silicon Valley Silicon Valley is “ground zero” for innovation. 7 Paradoxes of Silicon Valley Paradox 1: Mountains in the Valley. Paradox 2: Academic aristocracies sing praise to meritocracy. Paradox 3: Scarcity in the land of plenty. Paradox 4: Innovation masks tradition. Paradox 5: It’s OK to fail if you shoulder the blame. Paradox 6: Long on knowledge, short on wisdom Myths about entrepreneurship in Silicon Valley The Valley is an open network. The Valley is a meritocracy. Money, talent, and other resources are abundant. It’s OK to fail! Learning fuels success in Silicon Valley. Everyone cooperates – even competitors. Paradox 7: Competitors Collaborate and Collaborators Compete.

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It’s OK to fail if you learn – and shoulder the blame Myth 5: It’s OK to fail Paradox 5: It’s OK to fail if you learn - And shoulder the blame. <ul><li>How to cope with the paradox: </li></ul><ul><li>If you blame investors they won’t forgive or forget. </li></ul><ul><li>Fail fast and adapt before burning through your funding. </li></ul><ul><li>When failing remember to show grace under fire. </li></ul>

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Do the Paradoxes of Silicon Valley apply in your Entrepreneurial Cluster? The Paradoxes of Silicon Valley No ?? Yes 1. Mountains in the Valley 2. Academic aristocracies sing praise to meritocracy 3. Scarcity in the land of plenty 4. It’s OK to fail if you learn – and shoulder the blame 5. Innovation masks tradition 6. Long on knowledge, short on wisdom 7. Competitors collaborate, collaborators compete Are there other paradoxes in your community?

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What segment best describes you tonight? <ul><li>Raise your hand for the color that best fits you tonight: </li></ul><ul><ul><li>Blue = I have an opportunity, am looking for money and talent </li></ul></ul><ul><ul><li>Red = I have talent, am looking for the right opportunity </li></ul></ul><ul><ul><li>Green = I have money to invest (as a customer, angel, VC, etc.) </li></ul></ul><ul><ul><li>Yellow = I have other resources entrepreneurs need to grow </li></ul></ul>